Coronavirus crisis: SBI, Canara Bank, IDBI Bank defer payment of EMIs by 3 months; other likely to follow

In a bid to mitigate the impact of the coronavirus outbreak on businesses and individuals, three commercial lenders, including State Bank of India, have offered a three-month moratorium on term loan installments to their borrowers.  

SBI, the country's largest lender, on Tuesday said that it has initiated steps to defer equated monthly installments (EMIs) and interest on term loan falling due between March 1 to May 31 and extend repayment period by three months. The interest on working capital facilities for the given period has also been deferred by three months, it said.

Important announcement for all SBI customers.@guptapk @DFS_India @DFSFightsCorona#Announcement #SBI #StateBankOfIndia pic.twitter.com/hEWSXVxVIp

- State Bank of India (@TheOfficialSBI) March 31, 2020

SBI has already cut interest rate by 75 basis points to pass on the complete rate cut benefits to its borrowers availing loans linked to external benchmark linked lending rate (EBR) and repo linked lending rate (RLLR).

Also Read: SBI loans get cheaper! Bank passes on 75 bps repo rate cut to customers

In a similar fashion, public sector lender Canara Bank announced that customers can avail three-month moratorium on term loan installments and interest payments/EMIs falling between March 1 to May 31, while repayment period will get extended accordingly.

"In terms of Covid 19- RBI package, borrowers are eligible for moratorium/ deferment of installments/EMI for Term loans falling due from 01.03.2020 to 31.05.2020 & repayment period gets extended accordingly. SMS also has been sent to customers to avail the same. @DFS_India #COVID," Canara Bank said in a tweet.

IDBI Bank has also provided its customers a moratorium on term loan instalments and interest payments for a period of three months up to May 31, 2020.  However, those customers, whose cash flows have not been impacted, have been given the option to pay as per existing schedule.

Also Read: Banks free to defer payment of EMIs by 3 months! RBI gives huge loan relief

The decision is likely to provide major relief to customers, especially middle-class borrowers.

In a similar line, other banks are also expected to offer deferment on payments of installments for all term loans to provide some cushion to individuals, businesses facing a big economic challenge in the wake of the 21-day lockdown announced by the government.

The development came five days after the Reserve Bank of India (RBI) asked all banks and lending institutions to provide a three-month deferment on payments of installments for all term loans that were outstanding as on March 1.

Last Friday, the RBI governor Shaktikanta Das had said that all lending institutions and banks had been allowed to defer interest on working capital repayments by three months. It had said that moratorium on term loans and deferment of interest payment would not result in asset classification downgrade. The central bank has allowed banks to reassess the working capital cycle and said that they won't be treated as non-performing assets.